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06/11/2014

Looking Through the Wine Glass: A GAP experience

The premise seemed reasonable enough: Look for viable ways to help a successful California-based wine company expand its business into the Brazilian market. As Global Access Program projects go, it had lots of appeal: wine (who doesn’t love wine?); exportation; expanding in a booming market with a growing middle class — and working with tangible products already in production.

“It seemed like the hot ticket,” says team member Dave Insley (FEMBA ’13). “It was something we could get behind and flesh out to see if the idea was possible.”

“It looked to be a sexy project for a well-rounded team, one that wasn’t looking for five engineers,” adds Craig Mitchell (FEMBA ’13). “With our respective knowledge and experience in finance and operations, as well as online and creative marketing, we had all of the unique backgrounds that they wanted to see up front. It was an industry that excited all of us.”

In addition to Insley and Mitchell, the team included Andrew Partridge (FEMBA ‘13), Ryan Kimmel (FEMBA ’13) and Kyle Krafft (FEMBA ‘13), all of whom worked together on various projects and knew each other well. “We built the right team from the first day at orientation that worked well together,” says Partridge. “We had no choice but to succeed.”

Little did they know when they took on this project how important it would be to have a tight-knit crew.

The team was primed to help the client, Turn Key Wines, expand its overall business operations and evaluate an export market entry strategy for the Brazilian wine market. According to Nicholas Miller, Turn Key vice president of sales and marketing, Brazil looked ripe for the company’s expansion plans and interest in global exports, considering the country’s recent growth, booming economy, attention to tourism, the upcoming World Cup, etc.

“I didn’t think that it wasn’t going to work — until we got to Brazil,” admits Insley.

Kimmel concurs. “It wasn’t a bad idea, until we were on the ground.”

“From an export/import perspective, we saw red flags early on,” says Krafft. “It became clear that there would be hurdles to jump, given the complexity of the wine business and trade relations together with the competitive landscape with Chile and Argentina, which could ship wines to Brazil much more cheaply than we could.”

Complicating the effort were a battery of challenges, including high taxes and tariffs, large tax breaks for Argentinian and Chilean producers, and astronomical shipping and storing costs. To top it off, Turn Key Wines did not have established brand recognition, which was critical in a market that catered to an upper class that valued status symbols and were willing to pay for the privilege.

Over the course of the project, the team interviewed 109 individuals, culminating in more than 135 hours of research that covered all portions of the value chain, from distributors, retailers and importers to restaurateurs and wine dealers. They conducted two primary research trips to Sao Paulo, Brazil, and interviewed contacts at multiple locations and events in the United States.

In the end, the resolution appeared to be a no-brainer, according to Kimmel.

“We ran the numbers and the idea made no sense at this time,” says Kimmel. “Turn Key would be taking too much risk to make this expansion work at this time.”

The team was perhaps hardest on themselves with these findings. “My initial feeling was, ‘We failed,’” says Mitchell. “How come we can’t make this happen? After hundreds of hours of research, why can’t we find a way?”

While they couldn’t ignore the research, everyone knew it was going to be difficult to tell the company what they thought they wanted to do was wrong.

The solution? The team collaboratively worked to find other international opportunities and created a roadmap for potential entry into the Brazilian market. They also outlined key recommendations to better prepare the company for a Brazilian market when the climate changes and provided a broader export strategy that could benefit its domestic business. These included developing relationships with domestic wine exporters that specialize in exporting wines worldwide, developing a long-term branding strategy and hiring a dedicated person to handle marketing and sales and the branding initiative.

The Turn Key response: “They helped us understand that the U.S. market is a much different market than abroad,” says Marshall Miller, Turn Key vice president of finance and operations. “Being on the ground, they got to see how the process works, which we wouldn’t have known otherwise.”

“Through their thoughtful analysis, the team gave us the footprint to pursue a successful export strategy,” says Turn Key’s Miller. “In fact, one of our biggest markets now for Turn Key products (Smashberry and Ballard Lane) is Western Canada.”

The Takeaways

The lessons learned from the GAP project are vast, according to Insley. “Working on this project changed my outlook, gave me a greater sense of confidence to take on more responsibilities. Putting together a robust business plan provided a ton of knowledge that I’ve used to make two other plans — and since then have had two promotions.“

“Having been in banking for eight years, this experience opened me up to seek out new roles, adding more diversity in my daily activities and responsibilities,” adds Kyle. “The job we performed with this project grew so much and was so diverse, our success made me reflect on how much else is out there. This was the catalyst to make me move toward more problem-solving responsibilities.”

“This project was the most rewarding thing I did in school,” admits Mitchell. “It was a paradigm shift in how I look at my career and future. I learned how to properly analyze a market situation in an industry I knew very little about — how to follow logic, research and data to help make informed decisions. It taught me how to recognize my strengths and weaknesses and how to rely on my team, especially in an environment with smart, intelligent people.”

“This experience taught me to be very thorough, especially in my analysis,” says Kimmel. “I’ve learned not to hesitate to pick up the phone and call an expert in an area in which I am unfamiliar.”

The project also provided Kimmel with a side benefit. He had the opportunity to serve Turn Key wine at his wedding, which he admits was not only a big draw for the attendees, but a sure way to encourage the bride to make her appearance.

Despite going their separate ways after graduation, the team remains close and in contact. In fact, Krafft, Insley and Kimmel will be meeting up in Nicaragua soon for a bit of surfing.

“I know I have made friends for life,“ says Partridge. “Whether I am in New York or find myself back in the Philippines, I know they will still be my friends.”